Valero's Benicia refinery for sale?

Rumors are swirling that Valero is putting its two California oil refineries on the market, including one in Benicia that is the city's largest employer.

The speculation follows a Wall Street Journal report last week that said the San Antonio-based company has enlisted Citigroup Inc. to help find a buyer for the facilities.

The article cited unnamed sources familiar with the matter.

Valero operates a 78,000-barrel-a-day refinery in Wilmington, outside Los Angeles, and a 132,000-barrel-a-day refinery in Benicia. Together, the plants represent about 10 percent of the company's U.S. refining capacity.

Valero, which has been critical of California's ratcheting up of air-pollution regulations, has declined to comment on -- or confirm or deny -- the Wall Street Journal report. The article said Valero is trying to exit the state before the new regulations kick in.

"I can't discuss the published reports," said Bill Day, Valero's executive director of media relations. "They are based on statements from unnamed sources outside Valero, and it is our policy not to discuss rumors and speculation."

Valero Chief Executive Bill Klesse has leveled criticism against California legislation passed in 2006 that calls for air emissions to be cut to 1990 levels by the end of the decade. Valero and rival Tesoro Corp. waged an unsuccessful fight to overturn the legislation in a November 2010 ballot initiative.

Benicia city officials said they are monitoring the situation. Valero generates about 40 percent of the city's tax base.

"So far everything I have read says they are thinking about it," City Manager Brad Kilger said. "Obviously Valero is important to the city from an economic-development and financial standpoint and they have contributed a lot to the community in other ways."

"However, the refinery has been sold before," Kilger added. "So until we know that they are actually selling it and who the buyer may be, it is difficult to speculate what the impact will be."

Valero acquired the Benicia facility from ExxonMobil in 2000.

After a dispute over plant renovations, Valero agreed to pay millions of dollars for various city and school district environmental projects. Those obligations would remain in place even if the refinery were to change hands, said Dana Dean, attorney for Good Neighbor Steering Committee, which pushed for the agreement.